Tesla has surpassed Japan’s Toyota in market capitalization to become the most valuable auto producer in the world on Wednesday after its stocks soared up, in the week that marks the 10th anniversary of the company’s stock market entry. The firm has also become equivalent to three times the combined value of US competitors General Motors and Ford.
The electric carmaker’s shares have soared up fivefold during the past year. Tesla’s shares have started to rise since the start of 2020 as investors have begun to feel more hopeful about the future of electric vehicles.
According to a report, Tesla jumped as much as 4% to a market capitalization of $206 billion, while Toyota fell as much as 1% to a market capitalization of $203 billion. Shares in the electric carmaker touched $1,134 on Wednesday morning before falling back, leaving it with a market value of $209.47bn (£165bn) which is roughly $4bn more than Toyota’s current stock market value.
However, Toyota sold around 30 times more cars last year and its revenues were more than 10 times higher.
In the expectations of the company’s second-quarter delivery results, investors have raised up the shares of Tesla as much as 12% over the past two trading sessions. If Tesla manages to give a profit in the second quarter than it will become eligible to be added to the S&P 500 index, which would create massive demand for Tesla stocks.
Since the Chief Executive Officer Elon Musk has taken Tesla public, he has ignored many of the ground rules and norms of the auto industry like, selling its vehicles online and assembling them in high-cost areas. But while his company’s value has increased, there still remains a significant difference between his company and the world’s other biggest car manufacturers.
The Japanese company sold 10.46 million vehicles in the year to March and posted revenues of 30.2 trillion yen. Whereas Tesla ended 2019 with sales of just $24.6bn, having delivered 367,200 vehicles last year. However, Mr. Musk has said that Tesla will deliver at least 500,000 vehicles in 2020, a prediction that is not likely to be changed by the company despite the coronavirus outbreak, therefore investors are positive that Tesla would dominate the electric car market in near future.
According to a report Tesla produced 103,000 vehicles in the first quarter, or about 4% of the almost 2.4 million made by Toyota, which assembles its vehicles on affordability and reliability.
Analysts at the stockbroker Jefferies said the firm remained “significantly ahead of peers in the product range, capacity, and technology”.
Whereas, Toyota was strained to close its factories and showrooms in early February, its’s shares started to fall more than 12 percent since early February
Recently in December, Morgan Stanley’s Adam Jonas, who has invariably valued the business higher than other auto analysts, laid out three scenarios for 2020 that forecast Tesla’s value to rise 50 percent to $500, fall 25 percent to $250, or collapse 97 percent to $10 but the ultimate increase was considerably more than even Mr. Jonas’ highest estimate